Volkswagen Group and electric vehicle maker Rivian have announced a joint venture worth $5.8 billion.
Scout on updated VW-Rivian JV: "Great vehicles require great software. It makes total sense to combine American manufacturing & technology …This next-generation software-defined vehicle architecture will beautifully complement our Scout Community UX." https://t.co/iEtIS0IZk0 pic.twitter.com/injSzoHniy
— Michael Wayland (@MikeWayland) November 12, 2024
The strategic partnership aims to share EV technology between the two companies as they face slowing global demand and rising competition, especially from Chinese automakers. Shares in Rivian jumped over 13% in pre-market trading following the announcement.
NEWS: VW has increased its investment in Rivian by 16% to $5.8 billion.
Both companies also said they are launching their previously announced joint venture to develop EV architecture & software. https://t.co/2pXHxvNOHv
— Sawyer Merritt (@SawyerMerritt) November 12, 2024
The collaboration will provide Rivian with crucial funding as it prepares to launch its smaller and more affordable R2 SUV next year. For Volkswagen, the deal grants access to Rivian’s advanced technology, which it plans to integrate into its own vehicles by 2027. In a joint statement, the companies said, “By combining their complementary expertise, the two companies plan to reduce development costs and scale new technologies more quickly.”
Earlier this summer, Oliver Blume and I shared our plan for a joint venture between Rivian and Volkswagen Group. Tomorrow, we're excited to officially launch Rivian and VW Group Technology, LLC, led by co-CEOs Wassym Bensaid and Carsten Helbing.
This venture marks a significant… pic.twitter.com/DEaFCXFKZM
— RJ Scaringe (@RJScaringe) November 12, 2024
The partnership’s initial phase will involve developers and software engineers from both companies working together in California, with additional facilities planned for North America and Europe.
Rivian and Volkswagen have launched a new website to educate on their joint venture. Check it out to learn more about their plans to advance EV tech through software-defined vehicles, zonal controllers, and enhanced connectivity solutions.
Read more: https://t.co/j8ta5gqYRa pic.twitter.com/tB2kWE2bQP
— RivianTrackr (@RivianTrackr) November 13, 2024
Volkswagen, Europe’s largest car manufacturer, is facing challenges such as increased competition, rising costs, and a slower-than-expected transition from petrol and diesel vehicles.
Volkswagen partners with Rivian on EVs
The group, which includes brands like Audi, Lamborghini, and Porsche, is also rumored to be preparing for significant cost-cutting measures.
Meanwhile, Rivian is working to reduce its own expenses in response to softening EV demand by renegotiating contracts with suppliers and streamlining manufacturing processes. In addition to SUVs, Rivian produces electric delivery vans, primarily for Amazon, its largest shareholder. Amazon has placed an order for 100,000 of these vans, all expected to be delivered by the end of the decade.
Volkswagen plans to invest $5.8 billion by 2027, including $1 billion in convertible notes, $1.3 billion for intellectual property licenses and equity stake, and up to $3.5 billion in future equity, notes, and debt tied to specific milestones. Canaccord Genuity analysts noted that the joint venture helps alleviate “a significant chunk of the capital concern” and likely establishes the Rivian and Volkswagen venture as the platform of choice in the Western world apart from Tesla. This partnership represents a significant step for both companies as they navigate the evolving landscape of the electric vehicle market.
